`Starving the beast' won't stop it from growing

March 14, 2003|By Steve Chapman

CHICAGO - Republicans have been talking a lot lately about "starving the beast," but the pandas over at the National Zoo should not be alarmed: No one is advocating cruelty to animals. The phrase summarizes the GOP's new formula for reducing the size of government. Conservatives have come to the conclusion that a bigger deficit will mean less spending.

The theory is simple. When there's a budget surplus, they say, the extra money burns a hole in the pockets of our leaders. Cut taxes and increase the budget deficit, as the Bush administration has been doing, and there will be no money to spend. Deprived of funds, the liberals in Washington will be forced to curb their appetite for costly new programs.

Glenn Hubbard, who just stepped down as chairman of the White House Council of Economic Advisers, aligned the Bush administration with this view on a February visit to Chicago. "A mild deficit can actually restrain spending," he said in an interview. "It's not the deficit but the size of government that concerns me." Pennsylvania Republican Rep. Patrick Toomey, who serves on the Budget Committee, recently indicated his belief that "the deficit will force spending down."

As someone who subscribes to the notion that the world is too much governed, I'm open to any strategy that might offer relief. But the truth is, we've already run some big experiments based on this theory, and the evidence is clear: It doesn't work.

The idea dates back to Ronald Reagan, who said, "We can lecture our children about extravagance until we run out of voice and breath. Or we can cure their extravagance simply by reducing their allowance." Unfortunately, that option won't work if you forget to take away their credit cards. And Washington has a credit card with no maximum.

During the 1980s, the federal government ran huge deficits. Between 1981 and 1989, the national debt tripled. According to this theory, the federal leviathan should have shrunk faster than a snowman on a hot day. But even with Mr. Reagan striving to cut the domestic budget, that didn't happen.

During his time in office, total federal spending, adjusted for inflation, climbed by 23 percent. Discretionary spending, the part that is most subject to control by Congress and the president, increased by 16 percent in real terms. The only reduction came in discretionary non-defense spending, which fell by 10 percent.

Proof that this approach works? Not quite, because expenditures in this last category soared during the first Bush administration - despite the persistence of deficits in excess of $200 billion a year.

During the Clinton administration, by contrast, Congress and the president finally agreed on the need to take stern measures to balance the budget. The deficit was not only cut but transformed into a surplus.

If the "starve the beast" theory were correct, you'd expect to see outlays rising during the '90s. In fact, real federal spending rose only about half as fast under Bill Clinton as it did under Mr. Reagan. And discretionary expenditures, after inflation, didn't rise at all.

But now we're back in an era of red ink. And what do you know? No one in Washington seems to be feeling any pressure to take action against the deficit - least of all President Bush. His 2004 budget calls for spending more than $2.2 trillion, and the final figure is certain to be higher. He's shoveled money at both defense and non-defense programs. Under his plan, real discretionary outlays would be 19 percent higher in 2004 than they were three years before.

This is not hard to understand. Spending doesn't shrink because of deficits - deficits grow at least partly because spending is on the rise. When the budget is in the black, lawmakers are careful with our tax dollars because they don't want to be blamed for squandering the surplus. Once the deficit reappears, that pressure is off.

Voting to balance the budget has its political appeal. By contrast, voting to reduce the deficit from $300 billion to $280 billion doesn't earn you much credit with fiscal conservatives.

Republicans count on the stigma of deficit financing to scare Congress into spending restraint. But the more they preach that deficits are healthy, the less stigma there is. To the extent they accept red ink, they sap the will to do anything about it.

If you want to cut federal spending, there's only one sure way to do it: Cut federal spending. Lately, no one has the nerve to try that. The administration may claim it's starving the beast. But somehow, the critter gets fatter every day.

Steve Chapman is a columnist for the Chicago Tribune, a Tribune Publishing newspaper. His column appears Tuesdays and Fridays in The Sun.

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